December 27, 2018 11:26 pm

Production exceeding Canada’s pipeline capacity is ‘primary factor’ in oil price differential: NEB report

WATCH ABOVE: Some videos from Global News' coverage of Canada's energy sector.


A new report from the National Energy Board says the “primary factor” in recent steep discounts on western Canadian crude is that oil production outstripped export pipeline capacity by about 365,000 barrels per day.

The background report was compiled for federal Natural Resources Minister Amarjeet Sohi who has asked the NEB for advice on how to optimize existing pipeline and rail transport.

READ MORE: Sohi asks NEB for pipeline inventory in order to find more capacity

Watch below: (From November 2018) Canada Action Coalition demonstrators who have vowed to keep their pro-oil message front and center demonstrated in downtown Edmonton Friday morning, outside the building where Natural Resources Minister Amarjeet Sohi was speaking before business leaders.

Story continues below

The NEB says it has launched an online forum to gather public input and will meet with pipeline companies, producers, shippers, government officials and other experts in January to gather more answers for the minister.

The report notes that about one million barrels per day of nameplate Canadian oil pipeline capacity was added between 2013 and 2016 but there has been no new capacity since then.

READ MORE: Alberta truck convoy and pro-pipeline rally ‘way bigger than expected’: organizer

Watch below: (From Dec. 19, 2018) Truck drivers hit the road in Nisku Wednesday morning as a way to demonstrate their frustrations with how Alberta is being treated and demanding action on pipelines. Fletcher Kent reports.

It estimates that the available pipeline takeaway capacity from Western Canada in September was 3.95 million barrels per day but that oil production had risen to about 4.3 million barrels per day.

Discounts narrowed in early December after the Alberta government announced it would impose temporary curtailments of 325,000 barrels per day on the industry starting Jan. 1, a measure designed to draw down storage and restore normal market prices.

READ MORE: Notley and cabinet set legal wheels in motion to begin cutting oil production

Watch below: (From Dec. 3, 2018) For the first time in a generation, the Alberta government will impose a cap on the amount of oil that industry is allowed to produce. As Tom Vernon explains, the move is not without its critics.

© 2018 The Canadian Press

Report an error


Want to discuss? Please read our Commenting Policy first.